SeaWorld's $100M IPO Makes A Splash. But Would You Invest In Shamu?

SeaWorld Entertainment has filed to go public, two years after Blackstone, a private equity firm, bought the business of roller coasters and killer whales.

The IPO's exact pricing range and IPO date are unknown. Blackstone, advised by Goldman Sachs and JPMorgan Chase, will wait for optimal conditions in the market—debut issues like these are seen as risky investments, and their backers wait for risk-on environments before selling. SeaWorld says the offering could raise up to $100 million.

Should you jump in with Shamu, though? When a company with a big household name like SeaWorld goes public, it always attracts a great deal of attention.

Not too surprisingly, the company is filled to the gills with debt. (That is, of course, a hallmark of its private equity buyout.) SeaWorld had $1.83 billion at the end of September, giving the company a debt/equity ratio of 4. By contrast, Six Flags Entertainment has a debt/equity ratio of 1.1, while Cedar Fair is more than double SeaWorld's. Its debt/equity ratio is 8.2.

Behind SeaWorld: 11 aquatic parks that stretch from southern Pennsylvania to San Diego. It operates its namesake brand resorts, as well as Aquatica, Busch Gardens and Sesame Place (an entire park devoted, yes, to Sesame Street). All told, SeaWorld Entertainment has 93 different attractions devoted to water life—whales, orcas, dolphins, otters, walruses.

As for the fish-backed financials, SeaWorld has certainly swung to better performance since Anheuser-Busch InBev sold the business to Blackstone in 2009 for $2.7 billion. It made $19.1 million in 2011, as sales rose 11% to $1.3 billion. Through the first nine months of 2012, profit nearly doubled to $86.2 million from $50 million a year earlier.

Fact is, entertainment stocks made for good investments in 2012. Cedar Fair gained 49%, and Six Flags went up 45%. Still, as SeaWorld notes in its SEC filings, much of its business is tied to living creatures. Some 70% of revenue comes from admission, and you have to imagine that the sea critters and their performances are the major draws.